Are Cryptocurrencies and Bitcoin Too Volatile?

One reason why many don’t invest in cryptocurrencies is because they dislike the rapid fluctuations. The entire value of their holdings can go up +20% in one day and then -15% the next. They feel like it’s crazy slot machine. Additionally, rumor and news headlines can instill hype one week and fear the next.

Are these coins too volatile?

For the mid to long term, no.

If you plan on holding the coins for months (or years), and you invest sensibly, in the overall grand scheme of things, you will see growth. Yes, in the past two months, the market has experienced massive growth and massive corrections, but those who bought Bitcoin at the early of 2017 still have several times more value than what they had put in. In the long-run, more regular everyday people will enter the market and this will make the small minority of millionaire investors have less of an influence on the market.

Right now, less than 1% of people are in this market and it’s been gaining more exposure each week. Even if you bought coins in December, and saw your portfolio cut in half during January, you are still very early in the grand scheme of things. If even one of the coins you hold ends up being the next Paypal and millions of people use it, your portfolio will grow quite nicely. However, even if the market penetration of these coins only goes up to 2-5% and it grows into being a big niche market, you still go 2-5x your money.

In the short term, it is very volatile.

There is no guarantee that the value of your coins will be retained within any given week or month. Corrections and dips happen. You will also have coins that are stagnant and may not move for a while. I put some of the money allocated toward my retirement and life savings into cryptocurrencies. I plan on cashing out my coins in 1-3+ years from now. However, I would not recommend anyone investing money they may need in the short term.

Don’t put your emergency fund into coins.
Don’t put your grocery/car/mortgage money into coins.
Don’t put your child’s education fund into coins.
Don’t put credit card debt into coins (you may not be in a good position to pay it within a particular month).

Cryptocurrencies are a growing and lucrative adventure, but please

only put in money that you can afford to contently live without for 6-18+ months.